MEDTRONIC PLC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) | MarketScreener

2023-03-10 00:39:13 By : Mr. MEI XIN

Free cash flow is a non-GAAP financial measure calculated by subtracting property, plant, and equipment additions from operating cash flows.

[[Image Removed: mdt-20230127_g2.jpg]] Bistouri Électrique Ligasure

MEDTRONIC PLC  Management

The tables below present our GAAP to Non-GAAP reconciliations for the three months ended January 27, 2023 and January 28, 2022:

(1)Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.

(2)The charges primarily include business combination costs and changes in fair value of contingent consideration.

(3)We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.

The tables below present our GAAP to Non-GAAP reconciliations for the nine months ended January 27, 2023 and January 28, 2022:

(1)Associated costs include costs incurred as a direct result of the restructuring program, such as salaries for employees supporting the program and consulting expenses.

(2)The charges primarily include business combination costs and changes in fair value of contingent consideration.

(3)We exclude unrealized and realized gains and losses on our minority investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.

(6)The charges relate to the early redemption of approximately $2.3 billion of debt and were recorded within interest expense, net within the consolidated statements of income.

(7)The charges relate to the exit of a business and are primarily comprised of inventory write-downs.

(9)The charges relate to the Company's June 2021 decision to stop the distribution and sale of the Medtronic HVAD System within the Mechanical Circulatory Support Operating Unit (MCS). The charges included $515 million of non-cash impairments, primarily related to $409 million of intangible asset impairments, as well as $211 million for commitments and obligations in connection with the decision, including customer support

obligations, restructuring, and other associated costs. Medtronic is committed to serving the needs of patients currently implanted with the HVAD System.

Refer to the Summary of Cash Flows section for drivers of the change in cash provided by operating activities.

The charts below illustrate the percent of net sales by segment for the three months ended January 27, 2023 and January 28, 2022:

[[Image Removed: mdt-20230127_g3.jpg]][[Image Removed: mdt-20230127_g4.jpg]]

The table below illustrates net sales by segment and division for the three and nine months ended January 27, 2023 and January 28, 2022:

The charts below illustrate the percent of net sales by market geography for the three months ended January 27, 2023 and January 28, 2022:

[[Image Removed: mdt-20230127_g5.jpg]][[Image Removed: mdt-20230127_g6.jpg]]

The table below includes net sales by market geography for each of our segments for the three and nine months ended January 27, 2023 and January 28, 2022:

Looking ahead, a number of macro-economic and geopolitical factors could negatively impact our business, including without limitation:

•National and provincial tender pricing for certain products, particularly in China;

The graphs below illustrate the percent of Cardiovascular net sales by division for the three months ended January 27, 2023 and January 28, 2022:

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead, we expect Cardiovascular could be affected by the following:

•Continued growth of our Micra transcatheter pacing system. Micra AV launched in Japan in November 2021 and China in August 2022. Micra AV expands the Micra target population from 15 percent to 45 percent of pacemaker patients.

•Growth of the Cobalt and Crome portfolio of ICDs and CRT-Ds.

•Growth of the CRT-P quadripolar pacing system.

•Continued growth, adoption, and utilization of the TYRX Envelope for implantable devices.

•Continued growth of Arctic Front cryoablation for treatment of atrial fibrillation.

•Continued expansion and training of field support to increase coverage in the U.S. centers performing TAVR procedures.

•Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include, but not limited to, the Symplicity Spyral Multi-Electrode Renal Denervation Catheter, Pulse Field Ablation, a novel energy source that is non-thermal and Aurora Extravascular ICD.

The graphs below illustrate the percent of Medical Surgical net sales by division for the three months ended January 27, 2023 and January 28, 2022:

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In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Medical Surgical could be affected by the following:

•The pending contribution of our Renal Care Solutions business as a result of the May 25, 2022 definitive agreement with DaVita Inc.

•Continued global acceptance and future growth of powered stapling and energy platform.

•Our ability to execute ongoing strategies addressing the competitive pressure of reprocessing vessel sealing disposables and growth of our surgical soft tissue robotics procedures in the U.S.

•Acceptance of less invasive standards of care in gastrointestinal and hepatology products, including products that span the care continuum from diagnostics to therapeutics. Recently launched products include GI Genius and PillCam capsule endoscopy.

•Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include, but are not limited to, our Hugo RAS system in the U.S., Signia power stapling devices, and our Ligasure and Sonicision vessel sealing devices.

The graphs below illustrate the percent of Neuroscience net sales by division for the three months ended January 27, 2023 and January 28, 2022:

[[Image Removed: mdt-20230127_g11.jpg]][[Image Removed: mdt-20230127_g12.jpg]]

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Neuroscience could be affected by the following:

•Continued adoption and growth of our integrated solutions through the Aible offering, which integrates spinal implants with enabling technologies (StealthStation, O-arm Imaging Systems, and Midas), Mazor robotics, and AI-driven technology acquired from Medicrea for surgical planning and personalized spinal implants.

•Continued acceptance and growth of the Solitaire FR revascularization device for treatment of acute ischemic stroke and our React Catheter and Riptide aspiration system.

•Continued growth of Pipeline Embolization Devices, endovascular treatments for large or giant wide-necked brain aneurysms.

•Market acceptance and growth from SCS therapy for treating Diabetic Peripheral Neuropathy (DPN) on Intellis rechargeable neurostimulator and Vanta recharge-free neurostimulator which received U.S. FDA approval in January 2022.

In addition to the macro-economic and geopolitical factors described in the Executive Level Overview, looking ahead we expect Diabetes could be affected by the following:

•Market acceptance and growth of our InPen smart pen system, which allows users to have their Medtronic CGM readings in real-time alongside insulin dose information, all in one view.

•Continued pump, CGM, and consumable competition in an expanding global market.

•Changes in medical reimbursement policies and programs, along with additional payor coverage on insulin pumps.

•Our ability to successfully develop, obtain regulatory approval of and commercialize the products within our pipeline, which include, but are not limited to, our MiniMed 780G insulin pump, the Guardian 4 sensor, and our next-generation sensor Simplera, which have been submitted to the U.S. FDA.

The following is a summary of other costs and expenses (income):

For additional information about our restructuring programs, refer to Note 5 to the current period's consolidated financial statements.

MEDTRONIC PLC  Management

General Surgery Electrosurgical Unit © Edgar Online, source Glimpses